Malaysia’s construction giant IJM rocked by probe into alleged RM2.5 billion money laundering
The probe comes at a sensitive time, days after conglomerate Sunway’s proposed takeover of IJM
[KUALA LUMPUR] Malaysia’s anti-graft agency has opened an investigation into IJM Corporation, identifying a senior executive and a company adviser as persons of interest in alleged money laundering involving about RM2.5 billion (S$793 million) – a development that sent the construction group’s shares sharply lower on Monday (Jan 19).
In a filing with Bursa Malaysia, IJM said that officers from the Malaysian Anti-Corruption Commission (MACC) and the Inland Revenue Board were present at the company’s office to obtain information as part of the authorities’ process.
The conglomerate – a diversified group spanning construction, property, industry and infrastructure – assured stakeholders that it is focused on maintaining operational stability while navigating current regulatory and deal-related uncertainties.
“IJM is cooperating fully with the authorities and remains committed to the highest standards of corporate governance, transparency and integrity,” the company said. It added that business operations remain unaffected, and that timely disclosures will be made regarding any material developments.
The investigation triggered a sharp sell-off in the stock. IJM shares fell as much as 16.4 per cent during intraday trading on Monday, breaching the prescribed price limit and prompting Bursa Malaysia to suspend intraday short-selling for the remainder of the session.
The shares later pared losses to close nearly 5.4 per cent down at RM2.65, with about 108.6 million shares transacted.
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Bursa Malaysia said that intraday short-selling in IJM would be reactivated only on the next trading day, Jan 20, at 8.30 am.
Top management involved
Online news portal Scoop earlier reported that two IJM officials had been identified by MACC as persons of interest; both are overseas. One of the individuals is a member of IJM’s top management and holds a Tan Sri title, while the other is a company adviser.
Based on the report, the investigation was initiated after the UK’s Serious Fraud Office began probing suspected corruption and money laundering linked to multibillion-ringgit investments involving the duo.
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Malaysian investigators are also examining the possibility of share price manipulation in connection with the alleged money laundering scheme, the report added.
In a separate report, The Edge quoted MACC chief commissioner Azam Baki as confirming that investigations involving IJM are ongoing, though no charges have been filed and no arrests announced.
The probe comes at a sensitive time for the company, just days after IJM emerged as a takeover target for blue-chip conglomerate Sunway, which proposed to acquire the construction group in a share-and-cash deal valuing it at slightly over RM11 billion.
The combined entity is projected to reach a market capitalisation of RM47.7 billion, unifying 2,300 hectares of land and a RM118.1 billion gross development value pipeline with an order book potentially worth RM13 billion.
Merger deal faces scrutiny
Market observers said the unfolding investigation could complicate the proposed acquisition, depending on its scope and whether any enforcement action is ultimately taken. For now, there has been no official indication that the deal has been suspended or withdrawn.
The takeover by tycoon Jeffrey Cheah’s family-controlled Sunway would create Malaysia’s largest property and construction conglomerate.
However, the deal has sparked political scrutiny over the consolidation of corporate power and the potential dilution of bumiputera (ethnic Malay and indigenous) equity, highlighting the deep ethnic sensitivities surrounding major corporate ownership in the country.
Umno Youth chief Akmal Saleh said in a Facebook post on Jan 18 that bumiputera ownership in major listed firms was already limited, and could shrink further if Sunway’s acquisition of IJM proceeds.
He highlighted that state-linked investment vehicles such as Permodalan Nasional and the Employees Provident Fund (EPF) collectively hold a 47.1 per cent stake in IJM, making the company a significant repository of bumiputera-linked capital.
IJM’s largest shareholders include EPF with 18.4 per cent, Amanah Saham Bumiputera and Permodalan Nasional with 12.9 per cent, Kumpulan Wang Persaraan – Malaysia’s retirement fund – with 9.6 per cent, Public Mutual with 4.6 per cent, Vanguard Group with 4 per cent, and Urusharta Jamaah with 3.7 per cent.
The Malay Businessmen and Industrialists Association of Malaysia also questioned the deal. Its president, Azamanizam Baharon, urged Malaysian Prime Minister Anwar Ibrahim to intervene, warning that the transaction could amount to a “historic policy mistake” if it results in further erosion of bumiputera participation in large corporate assets.
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